Peter Ladner to release "his version" of SEFC situation

Post by Mike Klassen in

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ladnerA Breaking News item: former NPA mayoral candidate Peter Ladner is revisiting the limelight thanks to the Southeast False Creek development controversy. He will be releasing "his version" of the SEFC situation shortly.  Stay tuned to as we follow-up on this story.

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Here is Peter's article, reprinted here from

Olympic Village political football a losing game

By Peter Ladner

Mayor Gregor Robertson and his council have to focus on protecting taxpayers and completing the Olympic Village project on time, rather than using inflammatory rhetoric and misleading information to blame selected members of the previous council for problems beyond their control.

No one was able to predict the unprecedented real estate market meltdown, credit freeze and skyrocketing construction costs that undermined the financial feasibility of the project. These were compounded by the city’s commitment to meet a rigid November 2009 completion deadline, dating back to the Olympic bid agreement signed in November 2002. That agreement, followed by the 2003 sign-off on the bid, was part of a string of decisions that got us to today, where the city is carrying far more financial responsibility for this project than anyone wants. Yes, the current level of risk is a major problem, but the ultimate financial outcome is still unknown, and the project is still a development jewel.

To paraphrase the mayor, the Athlete’s Village is a billion-dollar project and the city taxpayers own it. To suggest that the ultimate cost to city taxpayers will be anywhere near $1 billion is inaccurate, inflammatory and highly irresponsible. The bottom line on the project won’t be known until the $875 million cost to complete is offset by sales of all the units. What’s not counted in that number is the $70 million equity Millennium Development has in the project, the $50 million contingency still to be released by Fortress Investment Group (NYSE:FIG) and the $200 million-or-so guarantees the city has from Millennium’s other holdings worldwide.

What is little understood is that the project is being financed under the Property Endowment Fund, worth $2.7 billion at the peak of the market, and well-able to buffer the taxpayers from any possible losses – just as it grew to $2.7 billion without any call on the taxpayers.

In retrospect, the key decision that exposed us financially was the internal Southeast False Creek Steering Committee’s agreement to heed our legal staff’s advice to give Millennium a ground lease instead of taking its $193 million and giving it title to the property. This was felt to be the only way we could guarantee delivery of the project on time.

The city’s involvement in the Southeast False Creek Olympic Village project now spans four councils. Virtually all the decisions have been unanimous, reflecting the commitment of all the councils to complete this project and make it a model of sustainability. People also have to understand that all the recent decisions, including the divided and gut-wrenching June 2007 decision to formally guarantee completion and a $197 million construction guarantee, as well as the unanimous October 2008 $100 million loan authorization, were made under tremendous time pressures to meet the immovable November 2009 deadline. The time crunch was hugely exacerbated by the COPE council’s seven-month revamping of the Official Development Plan in 2004-5 to add tens of millions of dollars in social amenities, which we now know the city couldn’t afford.

The biggest disagreements on this project were in late 2005, when the new NPA council made an unpopular political decision to scale back the COPE-mandated subsidized housing in the project to reduce the city’s financial risk. Vision and COPE have consistently argued for increased public spending on social housing, subsidized housing and day care at this site, moves that would further weaken the city’s financial position.

Using this project as a political football only increases the difficulty in finding outside sources of financing and selling the units at prices that will bring the best return to the city. What is needed now is for everyone to pull together, acknowledge past mistakes and negotiate the best deal to complete this project on time and with the least possible exposure to city taxpayers. That is more easily done without accusations and finger-pointing.

(Business in Vancouver January 20-26, 2009; issue 1004)

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